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What you don’t know about your HMO and your doctor could hurt you.

Health Maintenance Organizations (HMOs) and other managed-care plans, which insure about 1 million people in Ohio, Kentucky and Indiana, are paying doctors to limit such things as emergency care, hospital stays, expensive tests and referrals to specialists - and to keep it secret from patients.

Managed-care doctors concerned about their incomes have new incentives to skimp. Used to be, doctors made money when they provided more treatment, tests and care. Now, that can cost them money.

That’s one way managed care is finally reining in runaway heath-care costs. But now patients are threatened with another extreme - runaway control by insurers.

A report in the December 21 New England Journal of Medicine studied payment arrangements of 138 managed-care plans in 20 metropolitan areas. The authors focused on cost-saving incentives for doctors.

While plans vary, many work on an arrangement called capitation - a fixed monthly sum for each patient. This provides profits for doctors and insurers if patients need only check-ups and don’t get very sick. But if a patient needs expensive tests or prolonged treatment for diabetes or other chronic diseases, that cuts into profits. Most plans, the study found, now shift part of such higher costs onto doctors.

And that can work contrary to good care. Doctors who keep costs low may get big bonuses. Those who don’t may be dropped from the HMO. Some HMOs keep “report cards” that let doctors know how they’re doing. These list how many tests and referrals a doctor ordered, the costs and how this compares to the doctor’s peers. Some run a tab on how much each doctor costs the plan. One Cincinnati primary-care doctor said he got a warning note from his plan after her referred a patient to a specialist and discovered a serious problem that required expensive treatment.

Most of this is not generally known to patients. Some plans have “gag” rules that prohibit doctors from talking about financial arrangements and forbid them to discuss with a patient any care options that the insurer has not already agreed to provide. Care could be compromised when it’s needed most.

Other HMO rules, such as 24-hour maternity stays and replacement of registered nurses with cheaper “nurse extenders,” have patients worried about their safety.

Such controls are warranted for some doctors and patients who cavalierly consume costly care as long as someone else picks up the tab. HMOs flourish by cutting waste and increasing efficiency.

But their insatiable appetite for profits may push the pendulum too far. HMOs that sponge up huge profits and seven-figure salaries loot our health care system and keep patients in the dark. If they sacrifice quality for profits, they’ll get the bitter medicine they’re asking for - costly government regulation.

As health care staggers toward a balance, consumers should start asking some tough questions about money and gag rules to make sure insurance executives are not playing doctor.

What you can do

Most consumers’ insurance is paid by employers who buy managed-care plans. Before you sign up, ask your benefits manager or the HMO about how the plan pays doctors. Or, ask your doctor. Some questions:

Do doctors receive bonuses for limiting referrals to specialists, use of emergency rooms and tests? Are they dropped from the HMO or penalized for spending too much per patient?

Are doctors paid a set salary unaffected by the amount of care provided? Are they paid in advance for your care? How much? Who pays if the amount is exceeded?

Will your doctor tell you about medical options beyond those approved in the HMO?

Does your doctor feel a conflict of interest because of a plan’s payment method?

This editorial is reprinted from The Cincinnati Enquirer, January 18, 1996.

This website is an educational resource. It is not intended to provide medical advice or recommend a course of treatment. You should discuss all issues, ideas, suggestions, etc. with your clinician prior to use. Clinicians in a relevant field have reviewed the medical information; however, the Oley Foundation does not guarantee the accuracy of the information presented, and is not liable if information is incorrect or incomplete. If you have questions please contact Oley staff.

Updated in 2015 with a generous grant from Shire, Inc.

This website was updated in 2015 with a generous grant from Shire, Inc. This website is an educational resource. It is not intended to provide medical advice or recommend a course of treatment. You should discuss all issues, ideas, suggestions, etc. with your clinician prior to use. Clinicians in a relevant field have reviewed the medical information; however, the Oley Foundation does not guarantee the accuracy of the information presented, and is not liable if information is incorrect or incomplete. If you have questions please contact Oley staff.